Thomas Bernard McFeely could not have been more indignant. The Irish woman who has become the bane of his life, Theresa McGuinness, had challenged his UK bankruptcy. "As a British citizen I have always objected to being forced into bankruptcy in a foreign jurisdiction," he informed the high court in London in June. "I maintain this is a breach of my human rights."

The foreign jurisdiction in question is Ireland, where hollow laughter greeted McFeely's sudden declaration of Britishness. After all, this is a man who once believed so fiercely in his Irishness that he fought in the IRA. He refused to recognise the British court that sentenced him in Northern Ireland in the 1970s, went on hunger strike and was prepared to die in the notorious H blocks in 1980. He later broke from Sinn Féin to join the League of Communist Republicans. Then he became a multimillionaire property developer.

McFeely is bankrupt in Ireland now and will be out of business for 12 years. He is embroiled in numerous other court proceedings. His Victorian mansion on one of Dublin's most expensive avenues has been repossessed by the state. He says it's because he's a "Nordie"; that he is a victim of southern Irish prejudice against northerners, exacerbated by the global economic crisis. Few, however, see him as a victim. McFeely needn't worry about a roof over his head. His creditors, on the other hand, include several hundred people who bought apartments from him in Priory Hall, a development deemed so dangerous it was evacuated with fire crews standing by.

One Irish newspaper editorial recently said of McFeely that he lives on a "different moral planet to the rest of us". However, McFeely's planet is entirely recognisable as contemporary Ireland. His dramatic rise to wealth was encouraged and facilitated by successive governments of a Republic that each year commemorates the egalitarian ideals of the 1916 Easter Rising. A Republic that is, according to the findings of the recent Mahon tribunal, endemically corrupt.

McFeely's spectacular fall is mirrored by those of dozens of other developers and bankers, many of whom are queueing up to take advantage of more lenient bankruptcy laws in the UK and the US. Some have hidden billions abroad. Those paying for the excesses of the Celtic Tiger are ordinary Irish people, such as the former residents of Priory Hall, who took out inflated 20- or 30-year mortgages just before the bubble burst.

Ireland, puffed up for a decade on the success of its peace process and the booming of its economy, is now bust, a land of zombie banks, ghost estates and empty monster hotels. Irish sovereignty, fought for by generations, has largely been forfeited to the so-called troika of the International Monetary Fund, the European Central Bank and the European Commission.

McFeely regards journalists as "scum". We meet at the headquarters of his main Irish company, Coalport. The building is on the edge of one of Dublin's grandest Georgian squares, but its large boardroom is as sparse as a prison cell. Grubby white walls, a basic table and chairs, a single poster of the Manhattan skyline. He takes the seat at the head of the table. He tells me he used to have antiques in the boardroom, but the sheriff took them. He fields calls. One, he says, is from a bank manager in Portugal, where he also has property problems.

He was born in 1949, the eldest son in a Catholic family of 13, in Farkland, County Derry. His grandfather joined the British army and was injured in the first world war. His uncle was in the British marines and was killed in action. "My grandmother never forgave the British army for taking her son. She was one hell of a lady. She had presence. Her daughter, my mother, was fairly militant." His father was a cattle dealer and more of a nationalist than a republican.

McFeely says he will never forget the family home being wrecked during a raid by "the B men", members of the notorious unionist Special Constabulary. "You'd have thought a bomb had hit the place." The "B Specials" were usually local men; the poet Seamus Heaney, also from Co Derry, called them "neighbours with guns".

McFeely went to school in Derry. "There were houses that were semi-derelict. It was primitive to say the least. I remember seeing roofs with the slates in a big hollow in the middle." He left school at 14 and worked with a farmer until he was old enough to get on to a building site. When he was 15, there was an election. He was sent out to vote for the nationalist candidate, but voted instead for the republican: "I had a mind of my own." He served his time as a bricklayer, working from 7am till 9pm. "Everything I've done, I was diligent at it. I was 'on the grip', paid by the brick."

He went to England in 1968 and got work straight away. "The 5th of October brought me back. It was typical of what I had learned all my life – we were a people to be put down in our own country," he says. He is referring to the violent attack by the police on a civil rights march through Derry. Discrimination was institutionalised in Northern Ireland but was particularly acute in Derry, shortly to be dubbed "the capital city of injustice" by Bernadette Devlin (then a leading civil rights campaigner and soon to become Britain's youngest ever woman MP). Housing was at the heart of it, with disenfranchised and unemployed nationalists living in poverty in desperately overcrowded slums.

The Troubles had started, and McFeely pitched in: "I would always have been up at the front of the riots where the hand-to-hand fighting went on." Though he has boasted of wielding a hatchet, he says he also listened to the speeches and particularly admired Devlin and Eamonn McCann. "I was taken by the socialism. We were all downtrodden, even a lot of the Protestants, though they thought they were aristocracy." He stopped practising Catholicism in 1971. "As Lenin said, it is the opium of the people."

His activism quickly "morphed into" IRA involvement. "It was a way of getting back at the state." Facing six months in jail, he went on the run in the Republic, but missed the action and his fiancee: "I couldn't stay away." He got married and had two daughters. He set out to bomb the new dole office in Antrim, where he had bought a house. There was a chase, he was cornered, punched a policeman in the face, escaped, went on the run in the Republic, got caught, was jailed, escaped again. "I went back to the north," he says, "which was hot and heavy."

He knew Martin McGuinness, who admits he led the IRA in Derry at the time of Bloody Sunday in 1972, but claims to have left by 1974. "Martin was game. Martin was all right. It's not like him to leave in the middle of a good row," McFeely says with heavy sarcasm.

McFeely was not, he says, involved in the 1972 bombing of Claudy, a few miles from his childhood home. Nine people were killed, with no warnings given. "But if I'd been there I would have planted the bombs. It is the reality of war. I only regret I wasn't able to do more."

After carrying out an armed robbery on a post office, he and another IRA man took over a rural house, which was put under siege by the security forces. "It was a bit wild west, to be honest. The idea was to go out and take as many of them out as possible." He shot a policeman (who survived) and when he eventually gave himself up, he expected to be shot dead. He got away with "a fair decent beating" but was sentenced to 26 years in 1977 by a judge who called him "an extremely dangerous, intelligent and vicious young man".

McFeely puts his head in his hands when asked about his prison years. "What do you tell? You got booted around, the screws would come in with drink on them and raid the cells, they'd spit on your food, you'd to walk naked, they'd set the dogs on you… There was fear, humiliation. I was in for the fight – I'd give the screws a damn good kicking."

Screws were prison officers, mostly Protestants. He names one, "the only evil man I ever met", and says he is still glad he "died a horrible death, a bomb under his car – he was mangled". McFeely's violence meant he spent a lot of time "on the boards" (in solitary confinement).

After the British ceased to recognise IRA members as political prisoners, McFeely was the OC (officer in command) of those who refused to wear the prison uniform and went "on the blanket". This escalated into the "dirty protest". The prisoners stopped washing; they urinated in their cells and smeared excrement on the walls. Soon the cells were crawling with maggots and prison officers wore gas masks against the stink.

McFeely, described by another IRA prison leader as "a very, very strong character", was one of seven chosen to go on hunger strike, and was regarded as probably the most determined of them all. His face, gaunt, young, rakishly handsome back then, was on the posters that were carried on demonstrations in Belfast, Dublin and London. Halfway through, another prisoner described seeing McFeely: "It was frightening. He looked like a skeleton with skin pulled over him." After 53 days, with one man about to die and rumours of a deal with the British, the hunger strike was called off. McFeely was blind, and furious. He vehemently opposed the decision.

He is still full of rage about what happened. The deal was useless – the hunger strike had failed. When a new one began, the leadership refused his offer to go on it. "I had no role after that." The demoralisation was "absolutely terrible". Violence inside the prison and out on the streets continued. Ten men died on the hunger strike. Along with another ex-hunger striker, Tommy McKearney, McFeely split with Sinn Féin to set up the League of Communist Republicans.

Essie Kealing was a working-class hero. She lived in a flat in a complex that had been built for Dublin's poor by one of the 1916 revolutionaries. The flats were sold in the 1970s and Kealing led an eight-year rent strike to stop the landlord from evicting the tenants. In 1999, when she was 76 and had lived in her flat for 40 years, she received several visits from the new landlord, who attempted to persuade her to move out in terms that can be guessed at from her description of him as a "rough merchant". This was Tom McFeely, 10 years after his release from Long Kesh prison.

Though he had not recognised the court, McFeely had appealed against his sentence and was released in 1989. His marriage had broken up. He moved to Dublin. He likes to tell the story of his first night, sleeping in his small car, almost penniless. Hired initially by other former IRA prisoners, he went back "on the grip", intent upon building up his fortune brick by brick.

He was just in time to avail himself of minister Padraig Flynn's new light-touch regulatory regime which allowed "self-certification" of compliance with the law by architects, engineers and builders. Local authorities were empowered to carry out inspections, but in reality the pace of building was soon such that they lacked the resources to do so in more than a token number of cases.

Successive Fianna Fáil governments laid out a range of tax breaks and schemes which, along with low interest rates and a striking absence of regulation, were designed to encourage speculators. A government minister praised the Irish "frontiersmen" mentality. The New York Times said Dublin had become known as "something of the Wild West of European finance". Many of those who profited bankrolled the party. McFeely says he did not. "But if I'd been asked, would I have done it? Yes. I don't know anybody with a halo."

Within a couple of years, McFeely had enough money to buy a pub back home in Dungiven. He had no fear of authority. His modus operandi, if there was a finding against him in one court, was to appeal to a higher one. There were long-running legal battles with other major developers. "I pushed it all in front of me. I never kept money," he says.

He didn't part with it readily, either. Following a Criminal Assets Bureau investigation in 2006, he had to pay out more than €8m in unpaid taxes, dating back to his arrival in the Republic. The following year, Coalport was the subject of no fewer than eight high court proceedings. He took out a loan of €10m for his house, the former German embassy, but stopped paying the mortgage. In 2009 he was ordered to repay €6.2m to a bank, as well as a further revenue payment of €580,000.

McFeely's companies built houses, apartments and commercial units all over Ireland, as well as in England. He maintained the tradition of employing ex-prisoners. An absence of building experience was not a barrier. During the boom, he freely admits, "Everything was done in a rush. The attitude was get it up, get it off, get on to the next job. Come back and finish it later."

In 2002, Theresa McGuinness liked what she saw of McFeely's plans for a small development in County Dublin and paid a cash deposit of €35,000 on a house. It was a decision that would come to dominate her life for at least the following decade. Within two years she was suing McFeely. "You could see the house was a disaster by its roof," she said. "It was literally sagging in the middle. Inside, you'd have thought someone had taken a hammer to the place."

The signs were bad for Priory Hall right from the start. The development was part of the much-vaunted new Northern Fringe. "The idea was to develop an extension to the city of Dublin with high-density housing and good public services and transport," says local TD Tommy Broughan. Many of the top developers obtained sites. McFeely's was at the southern end of what was to have been the main boulevard through the new towns of Clongriffin and Belmayne. "They call it the boulevard of broken dreams now," Broughan says.

In 2004, a woman had just dropped her children at school and was driving home along the edge of McFeely's building site when her car was crushed by steel mesh grids weighing over a tonne. She was described as having narrowly escaped death. Two years later, another woman had a narrow escape when her car was hit by a section of scaffolding falling from the same site. A health and safety inspector said this was "one of the most unsafe" sites he had ever inspected. The high court ordered the site to be temporarily closed because of "systemic" breaches of regulations.

In the years that followed, there were complaints about estates left in an "appalling state", roads unfinished, "wires sticking out of the showers", fire hazards. After Dublin city council brought McFeely to court over problems in an estate in west Dublin, the president of the high court said there had been "clear unwillingness" and "foot dragging" by the developer.

Clongriffin today is a sorry sight. There's a forlorn railway station, but most of the promised facilities were never developed. Some estates are half-empty, while others have been half-built, then abandoned. Roads end in hoardings. One has "Drug dealers out" scrawled on it.

One public housing tenant at Priory Hall was taken to hospital because of the damp soon after it opened. Just before Christmas in 2009, the council moved its tenants out after fire inspectors deemed the buildings dangerous. Broughan demanded a debate in the Irish parliament about the "outrageous situation", pointing out that "key planning and building regulations" had obviously been ignored. McFeely undertook to do works.

One owner agrees to take me round and talk about what happened on condition that I do not use his name. McFeely's reputation as a "rough merchant" has not diminished. (In May, a London high court judge found there was a "strong suggestion" that, based on a sham lease he had helped to devise, McFeely had received almost €4m in rents for a building near the Olympic Village in Stratford, and that he and others had intimidated the directors of the leasing company.)

"My wife and I bought off plans in 2005," the apartment owner says. "It was our first home together. The apartments were expensive but this was the peak of the boom and the banks were throwing money at people. We brought in a surveyor but he was refused access."

The security man on the locked-up site lets us in and we climb stained, carpeted stairs to the apartment. The living room window looks out over the abrupt end of the road and a mound of grassed-over rubble at the edge of waste ground where the boulevard was meant to be. "We kind of knew from the start the place was blighted," the man says. "The car park was always flooded. The place was damp. One morning we were woken by a knock on the door and it was the young couple downstairs. Their ceiling had fallen in. Sewage pipes went nowhere – just ended. We were paying a management fee but nothing was getting done."

Then, one morning in October 2011, the man was driving to work when he heard on the news that the city council had gone to court to get an order for the apartments to be evacuated. Insurance companies ceased cover. Fire crews stood by as residents packed cars and vans, and moved to hotels, spare rooms and rented apartments. The high court ordered the council to pay for their accommodation – it has since appealed against this.

"Self-regulation is outrageous," the man says. "It turns out McFeely declared the complex to be 'in substantial compliance' with all the rules and regulations, and the council just accepted that. It was crazy – we first set eyes on McFeely in court. He called us begrudgers and 'jumped-up little Hitlers'." One resident shouted back at the builder that he "couldn't build a snowman".

At first, it was agreed that setting things right would take five weeks. Then a dispute blew up between McFeely and Dublin city council, which led to McFeely being arrested and briefly jailed, before he appealed to the supreme court, which found in his favour. When the council made public its enforcement order, the owners knew the place was doomed. "There were 18 pages of items, most of them very serious. Basically, nothing was right."

"They crucified me," McFeely says of the massive tax settlement he had to make with the Criminal Assets Bureau. Having paid, he went straight out and bought a Bentley for nearly €50,000. "I stuck my two fingers up at them. They thought they could destroy me. I'm getting hammered because I had the audacity to come down here and live on Ailesbury Road. It's the Free State mentality – I'm a Nordie with a republican reputation."

It is certainly true that the wealthy of Dublin tend to be snobbish and that the huge made-in-the-H-blocks Celtic cross in McFeely's drawing room window looks incongruous. He is far from being the only local resident to be familiar with the inside of a courtroom, but is one of the few who has been in jail. His fleet of vehicles is normal for the area – though the Bentley has gone. "I paid a lawyer with it." In fact, the McFeelys have been ordered to leave the house after his second wife failed to persuade the high court to let her remain there in her own right.

McFeely says his building practices and standards are normal, and that he has co-operated with attending to any "snags" as required, though he disputes others' assessments of these.

There is mounting evidence that he is right about standards – one large apartment block built by another developer has recently been evacuated as unsafe and it is likely that more will follow. "A lot of the other developers are bad-mouthing me because they think I'm bringing the heat on them," McFeely says. "But I'm no tout."

He makes no apology for his British passport. "I am still a republican, but I was born a British subject and I'm smarter than the rest of them. I fought for a socialist republic and I still believe in that. Blame the peace processers for copper-fastening the border. And by the way, you get better justice in the British courts."

There is still a framed poster on the staircase of Sinn Féin's offices in Dungiven, near McFeely's old home, showing him among the 1980 hunger strikers. The museum upstairs is full of Troubles memorabilia, including a glass case containing a couple of AK47s and a 1977 poster demanding "Break the connection with England – the source of all our evils". But all has changed. Downstairs, at the front desk, there's the order of business for the Assembly at Stormont, where Martin McGuinness is now deputy first minister. The day I visit, the front pages have photos of McGuinness and the Queen shaking hands.

McFeely's old IRA comrades are loyal. They speak of the "rare bond" that exists between ex-prisoners. They say they don't know much about what he is accused of in the Republic. Sean McGlinchey, now Sinn Féin mayor of Limavady, says McFeely, still a good friend despite their political differences, "never got over" the end of the hunger strike. "He is no angel, but we all have our faults, we all make mistakes." He admits McFeely was always aggressive. "He wouldn't go around a thing – he'd go through it. He's a bull."

Down the road in Derry, Eamonn McCann, who inspired McFeely all those years ago, is still a campaigning socialist. "McFeely represents something almost stereotypical," he says. "A republican who is a property developer and a landlord. There is a great deal of resentment against the political establishment in the Republic. Men like McFeely feel they have done intense things 'for Ireland' and they are entitled to some return. Of course, you have Fianna Fáil ministers who have also acted as if the state is something to be treated with contempt."

Theresa McGuinness has no interest in any of this. She has spent the past decade fighting through the courts, representing herself, to get McFeely to pay her back the money he owes her for the house she never got. She has been more assiduous than any state agency in her pursuit of him. "This man has put me through a pure nightmare," she says. "Why should I let him get away with it?"

McFeely is much debated on political websites. One contributor recently said of him, it's like "all that's been wrong with this land for the last 40 years" in one man.